Paritian

Finance

Price Increase to Keep Your Margin Calculator

The new selling price that keeps your margin percentage when costs go up, and the smaller price that only keeps the same profit in money per unit.

Results

New price that keeps the same margin % 11.67
Margin today 40.00 %
Price increase that takes 16.67 %
New price that keeps the same money profit per unit 11.00
Margin % you would then have 36.36 %
Price increase for that 10.00 %

What this tool does

When the cost of a product rises, passing on only the extra cost keeps your profit per unit in money but lowers your margin percentage, because the same profit is now a smaller share of a bigger price. To keep the percentage you must raise the price by the same proportion as the cost: new price = new cost ÷ (1 − margin). The gap between the two answers is the trap: a product with a 40 % margin whose cost rises 10 % needs a 10 % price rise to hold 40 %, but only 6 % to hold the same profit per unit.

Formula

same margin %: new price = new cost ÷ (1 − margin) · same money margin: new price = price + (new cost − old cost)

Variables

SymbolMeaningUnit
c0Cost before the rise—
p0Current selling price—
c1New cost—
PNNew price that keeps the same margin %—
MNMargin today%
RSPrice increase that takes%
PMNew price that keeps the same money profit per unit—
MMMargin % you would then have%
RMPrice increase for that%

Worked example

  • Cost before the rise6
  • Current selling price10
  • New cost7
  • New price that keeps the same margin %11.67
  • Margin today40.00 %
  • Price increase that takes16.67 %
  • New price that keeps the same money profit per unit11.00
  • Margin % you would then have36.36 %
  • Price increase for that10.00 %

Limitations

  • This is an informational calculator, not personalised financial advice. Rates, fees, taxes and contract conditions vary between institutions and countries.
  • The tool works with whatever currency you use for the inputs; it does not convert between currencies.